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In response to the French lobby of lifting RP ban

Binay met with Siim Kallas, vice president of the European Commission
and Commissioner of Transport, to discuss the European Union (EU) ban on
Philippine carriers and report measures that the government has
undertaken to improve the state of the Philippine aviation industry

October 31, 2012By Eric B. Apolonio

The European Union has remained non-committal on the possibility of lifting the ban on Philippine carriers from flying to Europe.

EU Commissioner for Transport Siim Kallas even told Vice-President Jejomar Binay that “when it comes to air safety, we don’t’ have friends.”

Siim Kallas, however, assured Binay that the ban “was not meant to discriminate against non-EU carriers,” since European carriers were not immune from the same ban if they fail to meet the US strict air safety standards.

Kallas said that the Union had always put a premium on air safety and in “maintaining professionalism and “regularity of safety inspections.”

“When it comes to safety, we don’t have friends,” he said. The main issue for the Philippines, Kallas said, was “maintaining the professionalism and regularity of air safety inspections.”

The EU banned Philippine carriers from flying to Europe starting in April 1, 2010, following the decision of the United States Federal Aviation Administration to downgrade the Philippines’ rating to Category 2 from Category 1 starting on January 17, 2008.

The FAA said that the Air Transportation Office of the Philippines “did not fully satisfy international safety standards.”

Binay, who was in Europe as part of his three-nation swing, including a visit to Vatican City, where he represented President Benigno Aquino III during the canonization of Pedro Calungsod, said he had assured Kallas that the country had already sought technical assistance from other governments to improve the Philippines’ air safety standards.

“I informed the commissioner that the Philippines had sought technical assistance from the French government to improve air safety standards, and that Philippine Airlines, which is now under new management, had just ordered 54 airbus aircraft in line with its re-fleeting program,” said Binay, who arrived on Monday from Europe via Hong Kong.

Binay said the current International Civil Aviation Organization-coordinated validation mission in Manila on October 24-28, 2012 to assess the current capabilities of the CAAP regarding safety oversight and in compliance with ICAO standards and Recommended Practices showed the country’s desires to lift the European Union ban on Philippine carriers.

In response, Kallas said the Union “was very interested in developing an air safety agreement with the Philippines.”

President Benigno S. Aquino III winds up five-day visit to New Zealand and the Commonwealth
of Australia, as he prepares for departure to Manila yesterday via
Philippine Airlines Airbus A330-300 (RP-C3333) flight PR001 at the Hawker Pacific Flight Center in
Sydney International Airport.

A Philippine Air Force (PAF)
C-130H “Hercules”(tail number 4704)cargo plane has arrived in Manila last October 17after being
sent to the United States for “Periodic Depot Maintenance”
last August 8 at a British Aerospace facility in Mojave, California. A
budget of P190 million, funded through Foreign Millitary Sales, was
allocated for the repair.

The C-130 left California October 14 and
made stopovers at Hawaii, Wake Islands, and Guam in the Pacific before
its arrival in the country.The crew consisted of Colonel Jose Mirandilla Jr., Deputy Wing Commander
of the220th Airlift Wing, Lieutenant Colonel Ramil Oloroso as test
pilot, Major Michael Edrik Encarnacion as pilot-in-command, Captains Ian
Dexter Danes and Merrito Quijano as co-pilots

As China makes reconciliatory gestures to PH

October 26, 2012

The nuclear powered US Navy aircraft carrier USS George Washington
anchors in Manila Bay on Wednesday October 24. The Nimitz-class aircraft carrier together with two escort destroyers are
here for a goodwill visit.

After confirming that Americans are indeed back at Subic, Chinese Vice Foreign Minister and Special Envoy of the Chinese
Government Fu Ying wasted no time to call President Benigno S. Aquino III last week at
Malacañang to impart the message from Chinese President Hu Jintao
that China places great importance and value to the long-standing
friendship with the Philippines.

Beijing began to have second thoughts on its expansionists plan and sent Vice Foreign Minister Fu to expressed
the Chinese government’s desire to move Philippines–China relations
forward to benefit the peoples of both countries.

The sudden change of tack by China in what W. Scott Thompson, geopolitics and defense expert, writing for New York Times and New Straits Times, called serious "miscalculations" on the Philippine resolve to protect its territorial sovereignty.

Thomson said that China flexed its muscle into the country after its President for nine years Gloria Arroyo, let the Chinese have whatever they wanted, in return for personal favours, like broadband project, which allegedly carried a 50 percent cut to President Arroyo before it blew up in their faces.

The United States military, particularly Admiral Samuel Locklear III, Chief of the US Pacific Command based in Hawaii, has said last July that the US is committed to develop a “minimum defense capability” for the Philippines, for which they are now building at Subic Bay transforming it into military logistic hub for Asia Pacific region guarded by three confirmed US nuclear submarines patrolling the South China Sea.

Locklear confirmed that the US Navy will have a semi-permanent rotational presence at Subic Bay, describing deployment as providing "peace of mind" for
Southeast Asia amidst increase maritime insertions of Chinese Navy vessels
into the South China Sea.

Navy
Adm. Samuel J. Locklear III, commander of U.S. Pacific Command, arrives
in the Philippines to meet with senior military officials in Manila,
Sunday. The United States and the Philippines share a Mutual Defense
Treaty, and the two nations work closely together through bi-lateral and
multi-lateral training to enhance interoperability. U.S. NAVY PHOTO

US Air Force Brigadier General Mark
McLeod of the US Pacific Command's (PACOM's) Director of logistics,
engineering, and security, said that SBIA will likely be used
to pre-position US logistics assets. Pacom is working with the Defense Department and the U.S. Agency for International Development to identify what materiel assets might be transferred to Subic as U.S. forces draw down in Afghanistan,.

“Part of what this office is doing is looking at the options of where we can forward locate humanitarian assistance capabilities in the theater,” says. McLeod, during an interview at the command’s Honolulu headquarters. “We want to posture them somewhere in the theater that would allow us to react very quickly.”

He said that the US was
looking for a "very low-cost storage capabilities" for equipment and
supplies in bulk readily available in case of armed conflicts in the Asia Pacific region.

Macleod further said that it might make more sense to forward equipment and supplies to a place where there is "easy access" as opposed to bringing it home and putting it in
central storage facilities.

DFA Visiting Forces Agreement Director
Edilberto Adan described the deployment as providing "peace of mind" for
Southeast Asia in the wake of a series of renewed territorial disputes
in the South China Sea.

Adan said the US will be developing Subic Bay International Airport (SBIA), and San Fernando Airport as military airport.
San Fernando Airport is currently being used for general aviation and charter flights while Subic Bay Airport used to be the Asian hub of American cargo carrier Fedex.

While Philippine
and US officials are keen to emphasise that neither increased military
visits nor the rotational presence of US forces at Subic are a threat to
any other country, they are clearly a point of tension with China.
Several dozen USN ships have anchored in Subic Bay since April's
escalation of the Spratly Islands territorial dispute between Beijing
and Manila.

"We go to many places in [the] region, even the
People's Republic of China itself," a senior US diplomat told Michael Cohen, a correspondent of Jane's Defence Weekly magazine.

"All we offer is stability and security, and we certainly have shown a
respect for sovereignty. We go when asked to leave, and do not claim
what is not ours."

Huntington Ingalls Industries
(NYSE:HII) subsidiary AMSEC recently signed an agreement in April 2012 with Korean shipbuilding giant Hanjin Heavy Industries subsidiary in the Philippines Hanjin Heavy Industries and Construction Philippines, Inc. (HHIC-PHIL) for maintenance, repair and logistics services
works to the US. Navy.

The Department of National
Defense (DND) is acquiring five naval helicopters from Agusta
Westland to boost the Navy’s
maritime security and disaster response capabilities.

The AW109KN version will be stationed on all frigate vessels acquired recently by the Philippine government, BRP Gregorio Del Pilar and BRP Ramon Alcaraz. The navy acquired from the United States (US) two Hamilton Class Coast Guard Cutters and converted it to frigate warships to patrol its maritime area. Two more missile-armed Maestrale Class frigates from Italy are expected to join the Philippine Navy starting next year. The other ASW choppers will be assigned to the Italian-Maestrale class frigates when they arrive in 2013.

DND Assistant Secretary Ernesto Boac said the project
costs P2.2 billion and would be funded by the Armed Forces modernization
program and the Department of Energy.

“The helicopters will improve the capabilities of the Navy. These
will be used for maritime security, internal security operations and
disaster response,” Boac said.

The fuselages of AW109 are made by PZL-Świdnik, the same company that manufactured the Sokol helicopters of the Philippine Air Force.

The first batch of AW 109 helicopters is scheduled to arrive on Oct. 17, 2013 and delivery is expected to be completed by Dec. 17, 2013.

Axes Macau, but introduces SIN & TPE

Air Asia Philippines (APG) is supposed to shake-up the domestic airline industry. Instead, it was the airline shaken by intense competition between low cost airlines in the Philippines.

Air Asia Philippines (APG) has thrown in the towel at Puerto Princesa, Palawan, and call it quits effective December 1 or barely seven months after staring the service in April 20, 2012. The culprit, heavy losses for the route from its hub in Manila-Clark Airport.

Also axed is its flight to Macau after failing to improve its load factor to the Portuguese colony amidst stiff competition from other low cost carriers Cebu Pacific, and Singapore Airlines subsidiary SouthEast Asia Airlines (SEAIR).

The airline said that passengers who are affected by the flight cancellations will
be offered 3 options: a full refund of their flight bookings or a credit
shell of the value of their flight bookings which is valid for 3 months
or an option to change their flight date without any costs.

Unlike Air Asia Philippines, its Clark competitor flies directly out of Ninoy Aquino International Airport (NAIA) where majority passengers going to Macau and Puerto Princesa originates. AGP cannot fly and has no landing rights in NAIA.

Its CEO however has different story to tell saying that they were just re-aligning flights from Clark International Airport in preparation for two new
flights to Singapore and Taipei that they will launch in December and therefore calls for the rationalization of its flight
frequencies to some of its domestic destinations.

“With our two new international routes, we would like to draw more tourist to the country,” says AirAsia Philippines CEO Maan Hontiveros.

AirAsia will fly to Singapore on December 1 and to Taipei on December 15. It will also
add frequencies to Hong Kong but will reduce flights to Davao and
Kalibo from Clark.

While not admitting domestic losses, Hontiveros explained that they need to open profitable routes within an infrastructure that supports low-fare services since they are operating in an industry that is not immune to rising fuel cost and operational challenges.

But Brian Hogan, Zest Air Chief Executive Adviser, said that their
carrier is not "making money" in the domestic market because of the very
expensive jet fuel, and heightened domestic competitions between low cost carriers. The same sentiments was echoed by then airline President Avelino Zapanta when he still heads SEAIR saying that launching international destinations is the way to go to sustain domestic operations.

Zest Air maintains 14 Airbus A320's, while SEAIR operates a fleet of 6 A320's. Air Asia on the other hand operates only 2 A320's, contrary to its previous declarations that it would be fielding additional two new aircraft for its expansion before the end of the year.

AGP's expansion fleet might not be forthcoming at least this year with the latest restructuring strategy by the airline, and with only two operating airplanes to fly to, expansion maybe limited and returns bleak for this fledgling airline subsidiary of most successful Malaysia-based AirAsia Berhad.

Flag Carrier Philippine Airlines (PAL) has signed a five-year contract with Sabre Airline
Solutions to provide electronic ticketing services across its domestic and international
network as it prepares itself for migration to Oneworld Alliance.

PAL will upgrade its Passenger
Services System this Saturday (Oct 27) with its booking and ticketing
service migrating to Sabre. The Sabre Electronic Ticketing Hosting solution will come online on October 28 as the flag carrier shift its direction towards international growth and kick-start its much vaunted Project Winter

Interline
electronic ticketing used for allied airlines allows passengers to use a single electronic ticket when
their itineraries include travel on multiple carriers. Passengers with
electronic tickets may be rebooked between participating carriers without
having to first obtain a paper ticket.

The Sabre Airline Solutions Electronic Ticket Hosting solution provides
Philippine Airlines with connectivity to all GDS providers -- including the
Abacus Global Distribution System (GDS) -- as well as a number of interline
airline partners. These partners include American Airlines, United Airlines
and several other U.S. carriers.

PAL will be connected to its future airline partner American Airlines in the United States for domestic connections in the USA. This is not the first time that PAL entered into interline agreements with a US carrier. In 1996 it flew Chicago and New York via interline agreement with American Airlines.

Kevin Hartigan-Go, vice president Information Systems of Philippine
Airlines, says the new agreement will provide a range of cost benefits to the
airline while increasing relationships with Interline partners. Its also a huge boost to its Oneworld application.

"The benefits of moving to electronic ticketing are twofold. First, we'll
be able to reduce the costs incurred by processing paper tickets, and secondly
be able to improve efficiency and customer service levels," said Hartigan-Go.

"With this implementation, we are well placed to facilitate electronic
document exchange with other airlines whom we have Interline relationships
with, fulfilling the requirements of some U.S. carriers to support electronic
ticketing by 2005."

Sabre Airline Solutions-Asia/Pacific (APAC) head office is based in Sydney, Australia, with
offices/representatives located in Auckland, Jakarta, Singapore, Bangkok, Hong
Kong, Tokyo, Beijing and Mumbai.

In 2002, Sabre Airline Solutions signed
65 system contracts with airlines based in the Asia Pacific region, which
included the migration of 10 Asia Pacific carriers to the Sabre Passenger
Reservations System.

Sabre Holdings Corporation (NYSE: TSG) is a world leader in travel
commerce, retailing travel products and providing distribution and technology
solutions for the travel industry.

More information about Sabre Holdings is
available at http://www.sabre-holdings.com

Prime Minister Jean-Marc Ayrault of
France addresses French and Filipino businesspeople prior to witnessing
the formal signing of contract for the purchase of 64 new Airbus
passenger planes worth US$7-billion by Filipino flag-carrier, the
Philippine Airlines, Saturday, Oct. 20, 2012 in Manila, Philippines.
Ayrault is here for a three-day official visit, the first by a top
French official since establishing diplomatic relations in 1947.

It took a US$ 7 billion Airbus order for the French to return to the Philippines with no less than their Prime Minister witnessing the signing of the purchase contract between Philippine Airlines (PAL) and Toulouse-based Airbus
Industrie in a deal marked by diplomatic lobbying for European investments in the country.

French Prime Minister Jean-Marc Ayrault arrive in the country for official visit to the Philippines in October 19 to 21 with 130 delegations comprising Ministers, Parliamentarians and businessmen.

Prime Minister Ayrault's visit marked the first ever visit of a French leader to the Philippines since the formal establishment of diplomatic relations in 1947.

Philippine Airlines President Ramon
Ang, center, addresses French and Filipino businesspeople shortly after
formally signing a contract for the purchase of 64 new Airbus passenger
planes worth US$7-billion by Philippine
Airlines, and witnessed by visiting Prime Minister Jean-Marc Ayrault of
France. At left
is Airbus Asia-Pacific Vice President Jean Francois Laval and at right
is Philippine Airlines Vice President and Treasurer Harry Tan.

The contract signing for 64 planes was confirmed by PAL and Airbus representatives at the Manila Business Forum on Saturday October 20, 2012.

The three-day visit was highlighted by a meeting in Malacañang between the French Prime Minister and President Benigno S. Aquino III, who exchanged views on moving bilateral relations forward, as well as on regional and multilateral issues.

One of the pressing issues discussed were the fate of its aviation rating by the European Union (EU), and the desire of Philippine Airlines to fly to Europe next year.

The country is blacklisted by the European Union and has a Category 2 rating from the U.S. Federal Aviation Administration.

The French said that it will rally support for PAL's eventual return to Europe. The next day, Ayrault met with Ramon Ang briefly at the Hotel Sofitel in Pasay City before the ceremonial signing was held.

“We’re hoping the prime minister can help us lift the EU ban,” Ang said during the signing of the deal with Airbus.

PAL likewise hope that with its recent selection of the Rolls Royce engines to power the new A330 and its new deal with Lufthansa Tecknik for maintenance, UK and Germany would also support the Philippines in its quest to lift EU's ban. Countries France, Germany and United Kingdom have vast influence in the European Union.

The first 10 Airbus planes of the 64-strong order is scheduled for delivery in 2013 as the flag carrier plans to buy up to 100 new jets in total within the next five to seven years.

Philippine Airlines (PAL) said in the business forum that it was still in talks with both Airbus and Boeing for its next tranche of aircraft orders to comprise its long haul fleet. It has six (6) existing orders for B777-300ER planes from Boeing, where 3 has been delivered, and with the fourth order to arrive by November this year.

Zamboanga, Cebu and Davao to follow

October 19, 2012

KOTA
KINABALU: MASwings Sdn Bhd (MASwings) is aiming to fly to Puerto
Princesa, Palawan Island in the Philippines by the first quarter of 2013
after it has successfully taken off to Bandar Seri Begawan of Brunei,
Pontianak and Tarakan in Indonesia.

Malaysia Airlines subsidiary MASwings will fly Puerto Princesa in the Philippines from Kota Kinabalu, says its Chief Commercial Officer, Shauqi Ahmad after launching flights to Brunei and Indonesia. It will be the airlines first destination in the Philippines and the route will be flown using ATR 72-500 planes.

The airline also intends to open additional destinations in Zamboanga, Davao and Cebu from Kota Kinabalu and Sandakan after launching flight to Puerto Princesa.

Ahmad said they were just waiting approval from the Transport Ministry granting them
permission to fly to UNESCO Natural World Heritage Site, the Puerto-Princesa Subterranean River National Park in Palawan.

“This is our
next plan for further expansion in the Brunei-Indonesia-Malaysia-
Philippines East Asean Growth Area (BIMP-EAGA) region, to achieve
MASwings’ vision of becoming the most reputable and preferred airline in
East Asia.” says Ahmad.

“We are looking at the positive way in this expansion
planning, especially with the recent signing of the Framework Agreement
for the Bangsamoro between the Philippine government and the Moro
Islamic Liberation Front (MILF), which is good news for any airline
companies,” he said.

MASwings aims to become an active regional player in BIMP-EAGA region.

“We believe this
is within our reach following the introduction of the new BIMP-EAGA
routes by linking out two major hubs Kota Kinabalu and Kuching, with
Bandar Seri Begawan and Pontianak and from Tawau to Tarakan February
this year,” Ahmad said.

He said the linkage has contributed
significantly to the increasing number of MASwings passengers and help
to boost tourist arrivals to Sabah and Sarawak.

MASwings operates a fleet of 14 aircraft from its base in Kota Kinabalu and Kutching in East Malaysia.It flies to 22 destinations across Malaysia, Brunei and Indonesia.

PAL to fly Saudi beginning March 31 with a vengeance

Philippine Airlines will begin daily flights to Riyadh on
March 31, followed by Jeddah in May 19, and Dammam in July 20

October 17, 2012

After almost two year hiatus, Philippine Airlines (PAL) will return to Saudi Arabia, but this time with brand new aircraft to boot and plenty of new planes to spare.

In a disclosure to the Civil Aeronautics Board (CAB), PAL said that it will begin daily flights to Riyadh in Saudi Arabia on March 31, followed by Jeddah in May 19, and Dammam on July 20, all in 2013.

The airline has said that it will be receiving 8 brand new Airbus A330-300 aircraft next year for Australia, and Middle East flights. Serving daily flights to the middle east require at least two aircraft for a given route.

PAL stopped its flight to Saudi Arabia in April 2, 2011 after the airline was allowed By Saudi Arabia's Transport Ministry to fly only three (3) specific
aircraft registries, one particular Boeing 747 and two Airbus 330s.

The airline said restrictions on what plane PAL can use for the route have
restrained its flexibility in operating the Manila-Riyadh service as they cannot operate other aircraft registries. This time PAL intends to register all eight A330's that will be delivered next year to service Saudi Arabia alone.

The flag carrier also notified CAB that it is continuing its code share relationships with partner airlines for destinations in Dubai and Abu Dhabi in UAE, Manama in Bahrain, and Doha in Qatar.

Cebu Pacific announced yesterday that it will be mounting more flights to and from Butuan, Cotabato, Cagayan de Oro,
Dumaguete, Dipolog, Legazpi, Puerto Princesa, Roxas, Tacloban, and
Zamboanga as it fills the void left by Philippine Airlines (PAL) which recently realign operations to
focus on major destinations in the Philippines.

Cebu Pacific vice president for marketing and distribution
Candice Iyog said that they will introduce additional flights when new planes arrive.

“We are just waiting for our new planes to arrive to cover key local destinations and mount additional
flights,” says Iyog.

The company has already launch more flights out of Cagayan de
Oro, Puerto Princesa, Tacloban and Zamboanga, as part of the 10
domestic routes CEB is launching in the second half of 2012. It recently introduced new routes from Davao to Dipolog, Cagayan de
Oro to Zamboanga, Puerto Princesa to Iloilo and to Davao, and Tacloban
to Iloilo.

According to the airline, its Cebu-Mindanao
passenger traffic rose 36 percent year on year. Traffic
between Cebu and other points in the Visayas grew 53
percent. Meanehile, its passenger traffic between Luzon and Cebu also increase by 49
percent, while Luzon to Manila traffic adds another 27 percent.

MANILA, Philippines - Budget carrier Southeast Asian Airlines (Seair) has tied up with UK-based Alpha Aviation Group (AAG) for the training of its pilots in anticipation of a surge in demand for pilots over the next 20 years.

Seair chief executive officer Patrick Tan said the tie-up would help the airline meet safety demands for international and domestic passengers.

“This partnership will help Seair meet the demands for safer travel requirements for local and international passengers. To keep pace with industry growth, we are currently expanding our aircraft fleet and working to equalize the supply and demand of pilots in our company,” Tan stressed.

A report from Boeing showed that the need for pilots would skyrocket, with the demand for 465,000 new pilots in the next 20 years to sustain the airline industry. The biggest demand would come from the Asia-Pacific region, where almost 185,600 new pilots will be required.

With continuous growth in air traffic of low-cost carriers, prospects for pilots and technical professionals look bright.

AAG Philippines general manager Nigel Harris said the agreement with Seair would provide training to the airline’s pilots.

“Filipino pilots have competitive advantage in the global aviation industry. This is why we are focused on the development of highly trained and certified pilots,” Harris said.

Last August, Tiger Airways Holdings Ltd., through Road Aviation II Pte Ltd, completed the purchase of a 40 percent stake in Seair for a total consideration of $7 million.

Seair operates two Airbus A319s and three A320s and more aircraft are expected to arrive to beef up its fleet. It has been in operating in the Philippines for 17 years and now flies to four regional and nine domestic destinations.

AAG Philippines is one of three academies under AAG, which delivers specialist training solutions to the international commercial aviation community. AAG Philippines is also an approved training organization (ATO) and a certified type rating training organization (TRTO) for the Airbus A320. It operates and maintains an A320 Level D full flight simulator at its training center in Clark, Pampanga.

“Pilots will find the flexible use of AAG’s training devices, instruction material, and examination tools optimally aligned to their needs. AAG will continue to champion talent development in the face of demand in the aviation industry,” he added.

Earlier, AAG also entered into an agreement with Zest Airways Inc. to train the airline’s pilots.

By Eric B. ApolonioManila StandardOctober 8, 2012
A Cebu Pacific (CEB) Airbus 320 flight from Cotabato to Manila was
cancelled before the weekend when the plane’s nose wheel got stuck while
the aircraft was making a 360 degree turn on the runway prior to
takeoff, officials said on Sunday.

CEB Vice President for Marketing and Distribution Candice Iyog said
the flight was called off and the Cotabato Awang Airport, which serves
Maguindanao province and neigboring areas, was immediatley closed down.

Iyog said the passengers were accommodated in the next flight, and
she appealed for public understanding because the incident “was beyond
our control.”

MANILA, Philippines - Zest Airways Inc. is spending at least $240 million for the lease of six Airbus 320 aircraft to beef up the airline’s existing fleet that service both domestic and regional destinations.

ZestAir senior vice president for commercial and external affairs group Reynaldo Rodriguez said two of the A320s are expected to arrive this year and the other four would be delivered next year.

“One will arrive by the end of the month or early November, while the second one will come in by the end of November or early December in time for the Christmas Holidays,” Rodriguez said.

By the end of the year, he said ZestAir would have more or less 15 aircraft of which eight are company-owned.

He said that four additional A320s are expected to arrive by the second and third quarter of next year and would serve the airline’s regional routes.

The lease price of each A320 is around $40 million.

Rodriguez said existing shareholders led by Amb. Alfredo Yao would finance the lease of additional aircraft.

On top of the six aircraft, he revealed that the airline is also keen on leasing two wide-bodied A330 to serve long-haul routes particularly in the Middle East.

“We are negotiating for two A330s and we hope to operate that by October of next year,” Rodriguez said.

He said the airline has existing flight entitlements in Bahrain and Kuwait and is negotiating for seat entitlements in the United Arab Emirates (UAE) and the Kingdom of Saudi Arabia (KSA).

The Philippine government, through the Department of Transportation and Communications (DOTC) and the Civil Aeronautics Board (CAB), successfully concluded air talks with UAE and Saudi Arabia.

Yao announced last July that the company was pursuing talks with strategic investors including Hainan Air of China for a possible 40 percent stake in ZestAir in preparation for the airline’s plans to go public over the next two years.

“It is still ongoing and we don’t know what will happen. Hopefully (we complete negotiations) this year. In the airline business you cannot do it by yourself and it is better if you have a partner,” Yao said.

Zest Air is currently under a five-year refleeting program which aims to add up to three aircraft to its fleet every year. It has an existing fleet of 13 Airbus A320 and nine turbo-propped engine aircraft.

Zeroes in landing slots at NAIA

October 4, 2012

Philippine Airlines (PAL) President and Chief Operating Officer Ramon Ang is not about to stop his buying spree as he starts investment negotiation with AMY Holdings for management control of low cost carrier Zest Airways, as he unleashed new strategy of acquiring more landing slots at Ninoy Aquino International Airport (NAIA) in case its planned airport project goes nowhere.

Backed by the hugely successful conglomerate San Miguel Corporation, with US$ 416 million (17.5 billion pesos) net income in 2011, they have plenty of reasons to spend the money for future growth.

Alfredo M. Yao of AMY Holdings is willing to sell the the airline
“lock, stock and barrel” according to Donald Dee, Airline Chairman, with the primordial consideration being the price of the buy-in. People from PAL is already making due diligence with the airline.

“It should be an offer we cannot refuse,” Dee said adding the sale of Zest Air could be concluded before the end of
this year.

PAL investments in Zest Airways is seen as a boost to the airlines cash flow, which has seen operations bordering the red line to some of its domestic network as a result of intense competition by low cost carriers in domestic sector.

Brian Hogan, Zest Air Chief Executive Adviser, said recently that
the carrier is not "making money" in the domestic market because of the
very expensive jet fuel. Hogan was the Chief Executive Adviser of Air Philippines Corporation who transformed the airline to Airphil Express to become the country's second biggest LCC, before he transferred to Zest Air .

"I would tell you right now. I don't believe any airline is making
money. Cebu Pacific is probably closer because they have a more
established business and they charge baggage and all that. You've got to
balance the domestic and international to break even," says Hogan.

"Its not making money so for us, I believe the play is to fly regional outside Manila," he added.

Zest Airways cut its daily flights to Virac, Catarman and Calbayog
from Manila last July 1, with a plan to remove its daily flights to
Marinduque, Masbate, Busuanga and Tablas in Romblon.

The airline has been offered foreign equity sale to Hainan Airline Group of China. However, negotiations with Hainan Airlines fell after it failed to secure management control of the airline. Under the 1987 Philippine Constitution, 60% of the airline's corporate shares needs to be controlled by Filipinos. Although investment agreement may be agreed for possible management control, both parties however failed to agree on the terms.

Zest Air was also in exploratory talks with Cebu Pacific and Air Asia Philippines, with the former almost exhausting all its landing rights, while the latter having problems securing landing rights at Manila Airport where the government already stopped granting new landing
rights due to airport congestion.

Zest Air is set to operate 14 Airbus 320 planes by end this year. The Civil Aeronautics Board said that the airlines average load factor hovers around
70 percent on the routes which it flies into, making their operation viable.

In 2011, the budget airline flew 2.3 million domestic and international passengers. ZestAir cut its passenger traffic target this year to three million
from the earlier goal of 3.5 million due to suspension of some domestic flights. Of the revised target, 2.5 million will
come from domestic flights and 500,000 passengers will come from international flights.

Pass ICAO, FAA follows with Cat 1

October 2, 2012

William K. Hotchkiss III, Director-General of Civil Aviation Authority of the Philippines

The International Civil Aviation Organization (ICAO) will send safety oversight audit team this month to conduct fresh audit of the Philippine Civil Aviation to find out whether the country has made substantial progress in addressing the Significant Safety Concerns (SSC) it issued on the Philippines on October 19, 2009 under the Universal Safety Oversight Audit Programme.

“ICAO notified us that they will be sending an audit team towards the end of October,” says William K. Hotchkiss III, Director-General of Civil Aviation Authority of the Philippines (CAAP).

Hotchkiss said that they already addressed most of the major concerns that were brought to the attention of the government, and upon instructions of President Aquino and Secretary Mar Roxas they already prioritized ICAO compliance.

“ICAO’s SSC is priority. We need to get first the ICAO certification because we are a signatory to it. After that we'll address the FAA matter,” he said.

“If we can address ICAO, we have no problems with FAA" Hotchkiss adds.

CAAP already informed the US Federal Aviation Administration (FAA) of the Philippine Governments change in priority plans last July.

Hotchkiss noted that ICAO and FAA concerns are essentially similar
and they are being addressed with the help of ICAO advisers who are in
Manila.

ICAO has send to the Philippines Compliance Personnel to help and oversee the country's implementation of SSC's. Two concerns remained pending, and that is lack of qualified training personnel which CAAP is addressing, and of a
standardized curriculum for the training of inspectors, which incidentally are also
the remaining concerns of FAA after their review conducted in January this year.

PAL to go Europe after Toronto, Awaits ICAO audit this month, and to join Oneworld Alliance

October 1, 2012

Philippine Airlines (PAL) has outline its move to fly Europe next as Felix Cruz, PAL Vice President Marketing Support, confirmed the airlines upcoming planning application to the European Union after The International Civil Aviation Organization (ICAO) schedules audit this month to review Significant Safety Concerns (SSC's) of the country's aviation industry.

“We hope for a
partial lifting of the EU ban, at least for us”, says Felix Cruz.

PAL is leaning on the same policy EU granted to another Asean carrier which country was likewise barred from entering European Airspace. Garuda Indonesia was granted exemption to fly Europe and has regular flights to Amsterdam.

Cruz said the
airline is likely to start flying Frankfurt which used to be
its largest European operation followed by London and Paris next year. They will be operated by Boeing 777-300ER one of which is scheduled to arrive by November and two other frames next year. The airline also awaits arrival of eight A330-342 that will see the plane flying to Australia and Japan, and maybe Europe.

“We want to fly to New York, add extra
flights to our current network in the USA but we wait for the US FAA to
upgrade again Philippines civil aviation to category 1 from category 2” says Cruz.

“Honestly, there is little
we can do but the government is working hard for that” adds Cruz.

Cruz said that they will add more flights to Australia. He said they will fly to Darwin which could start by early next year.

In the ASEAN region, PAL will boost frequency to Indonesia and will fly later to Cambodia, Laos
and Myanmar.

“ We already boosted the total number
of flights to Jakarta and opened Bali earlier this year”,
added Cruz.

Cruz said that PAL is heading for Oneworld Alliance and is currently in the process of upgrading its
IT with Sabre ticketing reservation system, which could pave the way to a future membership with
Oneworld scheduled for 2014. PAL membership to the alliance is sponsored by Cathay Pacific.

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